A view on commodities
- Thread starter DSM
- Start date
Just saw your question now.
Crude is weak, as there is a glut of oil and less of demand. There are a couple of reasons for the same. One being that US is producing oil from its shale fields. Over the last five years, US oil production is up a whopping 60%. Secondly, the world economy is not exactly in a tear. The global energy demand is down due to slugishness in the world economy. Add to it is the fact that there is a lot of crude comming in from different sources which is adding to the glut. For e.g the Kurds are exporting oil, the ISIS is also doing the same, having the oil fields in Syria in their control. So the outlook as of now for crude is weak. Today crude is down over 2%, having given up more than 50% of its gains made in the last week. Technically Crude is down on the weekly charts for over a year. As traders we ofcourse cannot trade basis the weekly or even the daily charts (considering the volatility) so it is better to look at trading crude basis intraday charts and important pivot levels.
Regards NG, the story seems similar. We have to wait for the US weather patterns to see which way the NG will swing. If there is an extreme winter, there will be a lot of demand for heating, and this will push up the prices of NG. Supply constraints/inventory levels is the second factor to watch. So again NG has to be traded alike crude - basis intraday charts and important pivot levels.
I realise that the answer that I have given you, is not what you may be looking for. But this is how things are as of now.
Crude is weak, as there is a glut of oil and less of demand. There are a couple of reasons for the same. One being that US is producing oil from its shale fields. Over the last five years, US oil production is up a whopping 60%. Secondly, the world economy is not exactly in a tear. The global energy demand is down due to slugishness in the world economy. Add to it is the fact that there is a lot of crude comming in from different sources which is adding to the glut. For e.g the Kurds are exporting oil, the ISIS is also doing the same, having the oil fields in Syria in their control. So the outlook as of now for crude is weak. Today crude is down over 2%, having given up more than 50% of its gains made in the last week. Technically Crude is down on the weekly charts for over a year. As traders we ofcourse cannot trade basis the weekly or even the daily charts (considering the volatility) so it is better to look at trading crude basis intraday charts and important pivot levels.
Regards NG, the story seems similar. We have to wait for the US weather patterns to see which way the NG will swing. If there is an extreme winter, there will be a lot of demand for heating, and this will push up the prices of NG. Supply constraints/inventory levels is the second factor to watch. So again NG has to be traded alike crude - basis intraday charts and important pivot levels.
I realise that the answer that I have given you, is not what you may be looking for. But this is how things are as of now.
Sangram,
Many threads have been opened on commodities, and most have been closed. There may be commodity traders, but not much of participation in the forum. I am sure there will be many good commodity traders, but may not want to post. What I am posting is just a general view, as I believe that traders have to make their own judgement and trade their own calls. The best way I believe to trade is to wait for the commodities to make a range of a few hours, then gauge the trend and take a trade once the range is broken. My 2C.
Many threads have been opened on commodities, and most have been closed. There may be commodity traders, but not much of participation in the forum. I am sure there will be many good commodity traders, but may not want to post. What I am posting is just a general view, as I believe that traders have to make their own judgement and trade their own calls. The best way I believe to trade is to wait for the commodities to make a range of a few hours, then gauge the trend and take a trade once the range is broken. My 2C.
I'm interested in trading commos and have applied for an account with zerodha. Hope will be trading from next week. A little help from you members. Is there any commodity only data provider? GDFL has commodities bundled with fno data and so it makes them little expansive. Sorry if my post is a distraction.
It helps to know the fundamental reason behind commodity moves. Here's an excerpt from an article in today's BusinessWeek.
Oil Prices Fall, and the Global Economy Wins - Matthew Philips
http://www.businessweek.com/articles/2014-09-29/oil-prices-fall-and-the-global-economy-wins#r=hpt-fs
Oil is in the midst of one of its steepest selloffs since the financial crisis, with prices falling 16 percent since mid-June. This has the Saudis contemplating even deeper cuts in oil production to keep prices from declining any further. The world’s biggest crude exporter told OPEC recently that in August it reduced output by more than 400,000 barrels a day.
It’s not yet clear how well that’s working. The Saudi cuts were offset in part by more oil from Iran, Iraq, and Nigeria—not to mention the continued record increase in U.S. oil production thanks to the shale boom. While prices are expected to rise slightly for international blends of crude over the next six months, domestic prices in the U.S. are forecast to be cheaper by next spring. That’s not necessarily great news for oil producers, but it could be good news for consumers and the global economy.
There are two schools of thought to explain the recent crash in oil prices: too little demand and too much supply. The question is which one is having the bigger influence. While the results are the same (lower oil prices), the reason for them is equally if not more important to the global economy. Demand certainly could be stronger. A stagnant economy in Europe, slower growth in China, and flat gasoline consumption in the U.S. are all tamping down prices. According to the International Energy Agency, the growth in the world’s demand for oil will be the slowest this year since 2011.
But the bigger factor appears to be on the supply side, as production growth outpaces demand. That was the case last year and is shaping up to happen again in 2014.
Oil Prices Fall, and the Global Economy Wins - Matthew Philips
http://www.businessweek.com/articles/2014-09-29/oil-prices-fall-and-the-global-economy-wins#r=hpt-fs
Oil is in the midst of one of its steepest selloffs since the financial crisis, with prices falling 16 percent since mid-June. This has the Saudis contemplating even deeper cuts in oil production to keep prices from declining any further. The world’s biggest crude exporter told OPEC recently that in August it reduced output by more than 400,000 barrels a day.
It’s not yet clear how well that’s working. The Saudi cuts were offset in part by more oil from Iran, Iraq, and Nigeria—not to mention the continued record increase in U.S. oil production thanks to the shale boom. While prices are expected to rise slightly for international blends of crude over the next six months, domestic prices in the U.S. are forecast to be cheaper by next spring. That’s not necessarily great news for oil producers, but it could be good news for consumers and the global economy.
There are two schools of thought to explain the recent crash in oil prices: too little demand and too much supply. The question is which one is having the bigger influence. While the results are the same (lower oil prices), the reason for them is equally if not more important to the global economy. Demand certainly could be stronger. A stagnant economy in Europe, slower growth in China, and flat gasoline consumption in the U.S. are all tamping down prices. According to the International Energy Agency, the growth in the world’s demand for oil will be the slowest this year since 2011.
But the bigger factor appears to be on the supply side, as production growth outpaces demand. That was the case last year and is shaping up to happen again in 2014.
Similar threads
-
-
NSE Starting Commodities Trading--Your Views?
- Started by newtrader101
- Replies: 5
-
International forex, commodities and indexes personal view and trade
- Started by tradertrader
- Replies: 40
-
-